U.S. banks that pass their next stress tests will allowed to raise their dividends after June 30, the Federal Reserve said yesterday, March 25.
The Fed will also lift any remaining restrictions on stock buybacks. Limits on dividend payouts to investors and share buybacks will be eased for “most firm,” the Fed announced.
Since June 2020, the Fed has barred Wall Street banks from increasing their dividends in an effort to ensure that lenders had sufficient capital to get through the pandemic recession. In December the Fed allowed most banks to resume buybacks.
In today’s market action bank stocks climbed with the Invesco KBWB Bank ETF (KBWB) gaining 3.00% on the day.
Among big bank stocks, Wells Fargo (WFC) was up 3.10% today. Citigroup (C) gained 2.34%. U.S. Bancorp (USB) added 2.66%., JPMorgan Chase (JPM) picked up 1.28%. And Bank of America (BAC) added 2.06%.
Citigroup is a member of my Dividend Portfolio. I recently added U.S.Bancorp to my Jubak Picks Portfolio. The Invesco KBWB Bank ETF is a member of my Perfect 5 ETF Portfolio.
